Survey says – RFPs increasing, but process improvements needed

“It’s no secret that corporate legal departments have embraced the use of RFPs and other competitive bidding mechanisms to identify, vet and engage outside counsel,” according to a recent survey conducted by LexisNexis®. The intent of the survey was to get a snapshot across law firms and determine the level of request for proposal (RFP) activity and corresponding efforts by law firms to respond. The survey was conducted from July 23 to August 3, 2012 and used responses from 213 law firms.

In reviewing the results, I think two things are clear:

the use of RFPs as a tool for selecting outside counsel continues to increase

significant process improvements are needed, on both the outside and inside counsel sides of the RFP process

Here are a few highlights from the report and my thoughts:

42 percent of respondents saw an increase in RFP activity at their firms over the past 12 months.

This tracks what we have been seeing in the marketplace over the past couple years. As a senior director at LexisNexis stated “the survey findings fall in line with a trend in recent years for corporations to seek formal proposals from firms.”

A surprising number of survey respondents simply do not know the level of RFP activity underway at their firms.

To me, this is a real problem. I have discussed this issue with business development managers at several firms – the problem is that the RFPs come in all shapes and sizes (some paper, some electronic) and are sent directly to lawyers, who often fail to inform the rest of the firm of the RFP and their response. What we need is a better, centralized system for receiving RFPs and managing responses. This is where cloud software becomes crucial.

46 percent of RFP responses can be handled with fewer than 20 hours of effort, but 7 percent of RFP responses topped out at 40+ hours per response. On a yearly basis, a total of 1,175 hours per year are spent on responses at smaller firms. At the largest firms 4,800 hours!

These stats are staggering. At the largest firms, they essentially have 2.3 full-time employees working on RFP responses. At small firms – one half of a full time employee. As anyone that has worked at a small firm would know, that kind of overhead can be cost prohibitive. The solution – streamlined and concise RFPs. Moving away from 100+ page responses and getting proposals more targeted and more relevant. Utilizing a platform for instantly generated proposals and archiving of past responses for quick reference. And large firms shouldn’t have an advantage because they can throw more hours at a response. Limit the length. Limit the waste.

Only a modest 58 percent of responses verified they bother to track wins and losses.

Put another way – 42 percent have no idea what the result was from their past RFPs. In light of the time spent (see above), this is shocking. What we need is an easy way to both track responses and receive feedback directly from inside counsel on all RFPs, regardless of outcome. Tracking results is a key way to measure ROI.

Founder of RFPattorney.com and author of the RFPattorney Blog. Over 8 years of experience practicing law, including past experience at an international law firm, a national law firm, and a small firm. Currently GC and VP Operations for large mechanical construction company. Midwesterner, home renovator, golden retriever wrangler, new dad, Wolverine, & avid hockey fan.